John Diaz:
Win, lose or draw, online fantasy sports is gambling, plain and simple, and it should be treated as such.
Marc Levine, a San Rafael Democrat, was the only one of 80 California Assembly members who dared to state the obvious: The booming online business of daily fantasy sports is gambling.
It’s gambling, pure and simple. Once can argue whether it’s right or wrong, played for fun or for profit — or whether it’s an asset or a burden to society — but it is gambling by the definition of most anyone not paid or co-opted by the industry.
Promoters of online fantasy sports sites hit back hard at Levine when he was the 1 in the 68-to-1 vote for an industry-tailored bill (AB1437) to regulate their games in California. They bombarded his district with an estimated $30,000 in radio advertising claiming that he wanted to “ban fantasy football” (untrue) and working against the desires of consumers (also untrue).
Rather, Levine, who partakes in lowstakes fantasy football with friends and colleagues, merely wanted an honest debate. The state Constitution’s prohibition on gambling required voters to pass amendments to allow horse racing in 1933, the State Lottery in 1984 and tribal casinos in 2000. How, Levine rightly asked, could the Legislature presume to pass regulation on sports betting that is clearly proscribed by the Constitution?
“They can’t refute the points that I’m making if they look at the history of gambling in California,” Levine said. “They just want to denigrate legislators who think for themselves. And they want to send a warning shot to the at- torney general to make sure she doesn’t get in their way.”
In a multitude of other states, attorneys general have moved aggressively against FanDuel, DraftKings and other sites for violating laws against sports betting. So far, at least, California Attorney General Kamala Harris, who is running for U.S. Senate, has ducked the question of whether these games are illegal.
The fantasy-sports industry is trying to jump ahead of Harris and other reticent attorneys general — not to mention federal investigators and regulators — with state-based legislation that would essentially impose rules on their own terms and, they hope, remove the clouds over their operations’ legality.
Representatives of the Fantasy Sports Trade Association recently visited our editorial board to make the case that their games do not amount to gambling. Their arguments were creative, but about as unpersuasive as any I’ve heard in recent memory.
The foundation of their contention that fantasy betting was mostly a game of skill, not chance, could also be applied to wagers on head-to-head games or poker or horse racing. It’s true that extensive research and a sense of the nuances of the game could enhance one’s chances of winning in any of those venues. But luck and other variables beyond an individual’s control ultimately determine even the best-prepped player’s bottom line. In other words: It’s gambling. The industry also is clinging to a 2006 law signed by President George W. Bush that expressly carved out fantasy sports from prohibitions on bank transactions with online gambling sites. But it’s important to note that daily fantasy sports on the scale and sophistication of FanDuel and DraftKings did not exist back then.
To some attorneys general, daily fantasy sports sites amount to a stock market without transparency and safeguards against insider trading. One of the big concerns is that the vast majority of winnings have been enjoyed by a small portion of players. The fantasy sports promoters point to that as evidence that skill prevails; others have surmised that certain super-high-volume contestants have found ways to manipulate the system by using complex data analyses to get themselves matched against guileless opponents. One recent study showed that 91 percent of the online fantasy prize money in Major League Baseball was won by 1.3 percent of the players.
“Their business model depends on gaming the system,” Levine said. “They need to have these sharks who can update rosters 100 at a time so they can get the 10 percent rake on every game. They’re not interested in having a level playing field for all players. They’re making it possible for the sharks with the algorithms and the software programs to run the table on the average player who is trying to have fun.”
AB1437 now moves to the California Senate. It remains to be seen how many senators, or Attorney General Harris, would be willing to risk the wrath of a well-heeled lobbying force to speak the inconvenient truth: This is gambling.